NPS rule change: Pension funds liable for third-party lapses under new PFRDA rules

PFRDA amended NPS regulations to make pension funds liable for lapses by third-party entities engaged to provide subscriber services.

The amendment inserts Regulation 4A into the Exits and Withdrawals Regulations, 2015, effective 13 July 2026.

Pension funds remain responsible to subscribers and are liable for acts of omission or commission by outsourced entities.

Engaged entities must have technological capability to integrate with pension funds or PFRDA-registered intermediaries.

PFRDA also introduced a Regulatory Sandbox framework to encourage innovation while safeguarding investors.